Friday, July 12, 2024

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What’s behind Los Angeles’ obscene amount of weed tax?

A couple days ago we talked about the huge amount of money state governments have been taking in from the sales of recreational pot, with California making $1 billion last year alone.

That’s great and all, but at what cost to the consumer? Well, it depends on the city. And if you’re in Los Angeles or Oakland, your price is hefty.

KCRW did an interview with Leafly, and they discuss the big differences in tax depending on the city you’re in. The two highest paying areas are Los Angeles (with about a 38.5% total tax) and San Jose, with Oakland and Long Beach not far behind. In contrast, you’d be paying $10 less for a $100 order in Weed, California.

This is due to the cities being able to set their own tax rates on top of the state rate.

“Californians just legalized cannabis in 2016. We’ve had legal sales for three years, and the main driver of these price increases is that local cities can set a local business tax rate for cannabis.

That’s anywhere from zero to 15% of gross receipts.  … And just for comparison, Oakland’s cannabis taxes are 417 times higher than Oakland’s taxes on guns and ammo business. And in Los Angeles, the marijuana taxes on businesses are 2,808 times higher than the business taxes on a check cashing or a payday lender,” says David Downs, a Leafly senior editor.

Asked what a fair tax rate would look like, Downs points to Oregon, where local business taxes cannot exceed 3%. It’s a valid point, considering the surprise of a high tax rate is surely discouraging to those strapped for cash and on the fence as to whether to take the legal route of buying marijuana or not.

Read the interview at KCRW.

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